There are lots of steps we take to mitigate risk:
- Diversification – by blending bonds, you are investing in multiple businesses rather than just one.
- Security trustee – In certain instances we will insist on a security trustee to be engaged. It is their sole role to protect the interests of the investors.
- Vetting process and on-going due diligence – we have an experienced team who assess all bond applications. This is comprehensive, looking at experience, security and viability of projects. We tend to favour established businesses and those with good covenants.
- Insurance – We insure some of our bonds. This covers capital losses (not interest) and offers us some comfort. However, claiming on insurance is a last resort after we have taken all possible steps to work with our bond issuer to
- Security – Often we are taking a charge over property and or debentures on businesses. This means we are able to be paid ahead of other creditors in the even of default.